Posted!

Join the Conversation

Comments

Welcome to our new and improved comments, which are for subscribers only.
This is a test to see whether we can improve the experience for you.
You do not need a Facebook profile to participate.

You will need to register before adding a comment.
Typed comments will be lost if you are not logged in.

Please be polite.
It's OK to disagree with someone's ideas, but personal attacks, insults, threats, hate speech, advocating violence and other violations can result in a ban.
If you see comments in violation of our community guidelines, please report them.

A fund that will be used to rejuvenate Detroit neighborhoods by using income taxes generated from the salaries of Pistons players and visiting NBA teams has been established with the approval of City Council today.

The proposal, which was originally introduced by Councilwoman Mary Sheffield on June 27, was approved 7-1, with Council President Brenda Jones voting against the resolution.

Sheffield's proposal came exactly one week after the council voted to greenlight $34.5 million in public funding toward the Detroit Pistons' move downtown, despite passionate pleas from some residents to reconsider or scrap the deal. The approval comes after the proposal was postponed for two weeks for further discussion.

The fund will also include the salaries of Pistons and Palace Sports & Entertainment employees. Under what's known as a “jock tax,” NBA players and staff for home and visiting teams can be taxed every day they work in the city.

During the initial meeting on the proposal, some council members expressed confusion over whether Mayor Mike Duggan's administration or the city council would have control over deciding how and where the money would be spent.

Detroit's Chief Financial Officer John Hill said at the time that council could request that the mayor present something outlining "how the plan might be expended."

The language was changed to allow council to submit projects to the administration for approval.

But today, Jones questioned whether Duggan's administration would be able to tap the fund to use it as it desires, specifically for projects that are under $25,000.

"Does the administration still have the availability to still be able to go into that appropriation?" Jones asked. "I know that if there is a shortfall somewhere else they can appropriate the money. ... When I stress something, there's a reason why I’m stressing that because I feel very strong about it. I cannot support it if that language is not there."

Sheffield agreed that the issue is important but said it can be addressed during the city's annual budget review.

According to a rough estimate from Hill, the salaries are expected to generate $1.3 million in income taxes annually. The fund will become effective in the upcoming fiscal year, Sheffield said.

In an interview with the Free Press, Sheffield said the funds will be focused on the city's neighborhoods and exclude downtown, Midtown and the boundaries of the Downtown Development Authority, which is the public entity that owns the arena.

The DDA has amended its district boundaries several times, most recently in 2013, to accommodate the new arena, which will also be home to the Red Wings, and surrounding development that covers a nearly 45-block area from Grand Circus Park to Charlotte between Woodward and Grand River.

Much of the community's concerns stems from the fact that the DDA is expected to collect $726 million in school property tax revenue through 2051 as part of its tax increment financing. The money will be used to pay off $363 million in bonds for public investments in the Little Caesars Arena and the surrounding development district.

DPSCD spokeswoman Chrystal Wilson previously told the Free Press that the new school district does not levy taxes and receives full funding from the state. The tax capture by the DDA — called tax-increment financing — would impact the former DPS district, which is already millions of dollars in debt.

A report from the city's legislative policy division, provided to the Free Press and compiled at the request of Sheffield, said it's anticipated that the operating debt of DPS will be paid off within 10 years, while the capital debt will be paid off within 30 years.

The amount of revenue DPS will have to pay off the debt will be affected by the arena project, the report said.

According to Michigan's 2012 Public Act 396, which amended the Downtown Development Authority Act, the DDA is allowed to capture incremental school property taxes to pay off bonds associated with a catalyst project costing at least $300 million.

But the LPD report said if DPS were able to collect taxes from the property that is part of the arena project, "the old DPS debt would be paid off quicker.

The funds would be available for the following purposes:

Removing blight

Providing new recreational opportunities

Providing home repairs for seniors and disabled individuals

Educational and apprenticeship opportunities for youth

Financing affordable housing developments.

And other potential uses that may later be identified

According to Sheffield, the fund could also potentially benefit the city's retirees.

The resolution states that an "unforeseen shortfall in the city's pension obligations," the fund will be used to "help meet pension obligations when general fund revenues fall below projections in any given year."

According to Sheffield, the fund will remain in effect until at least 2048 or when all obligations related to the $34.5 million in bonds to support the Pistons' move to Detroit are satisfied.